Gaming Guru

SLS, and visionary behind it, get warm Strip welcome

LAS VEGAS -- In the days leading up to last month’s opening of the SLS Las Vegas, Sam Nazarian’s phone was ringing off the hook.

Nazarian, 39, the visionary behind the Strip’s first major hotel-casino unveiling in four years, quickly learned he had support from the competition for the $415 million renovation of the Rat Pack-era Sahara.

Wynn Resorts, Limited Chairman Steve Wynn phoned from somewhere halfway around the world to wish Nazarian luck and to apologize for missing the lavish celebration.

“There are a lot of people rooting for us,” Nazarian told a crowd that packed into an SLS Las Vegas ballroom to watch this family’s ceremonial bell ringing before the party. “We need to make this a success.”

Strip leaders — and the gaming community as a whole — want the SLS Las Vegas to make it big.

One reason for the goodwill is the outgoing and likable Nazarian, who at 6-foot-4 and nearly 250 pounds presents an imposing figure.

He wants to be part of the community. A year ago, he bought a home in Summerlin. And on opening night, SLS presented a check for $30,000 to the After School All-Stars organization with a promise of more.

Nazarian also endeared himself by seeking advice and counsel from industry leaders, and often refers to folks such as Murren as “mentors.”

The admiration is mutual.

When casino bosses are asked their thoughts about Nazarian, the common response is, “I like Sam.”

SLS Las Vegas’ success would also alleviate an underlying worry: The last thing Las Vegas wants is a failed hotel-casino.

The trauma of the Great Recession remains fresh. The unfinished Fontainebleau, which stopped construction in April 2009, has sat untouched for more than five years and is the most prominent sign of the Strip’s economic battles.

Elsewhere, though, Las Vegas is on a roll.

Strip gaming revenue is up 3.6 percent in the first seven months of 2014. Las Vegas tourism officials expect a record 40 million-plus visitors this year.

The long-vacant New Frontier site was bought last month with the promise of a new resort. The Cosmopolitan of Las Vegas, which opened in 2010 and has never turned an annual profit, was sold to a deep-pockets investment firm in April.

And, Malaysia-based Genting Malaysia Berhad expects to start work on the $4 billion Resorts World Las Vegas before year’s end, enlivening the Echelon site shuttered in 2008.

SLS Las Vegas has its challenges. The property is at the north end of the Strip with little around it. The casino is small, at 56,000 square feet, and it’s not the driving force of the resort.

Credit Suisse gaming analyst Joel Simkins said the property focuses on restaurants and nightlife, with the casino second, and aims for a younger audience.

“The SLS should have strong appeal to the targeted demographic that currently goes to The Cosmopolitan and other nightclub/dayclub venues,” he said.

Nazarian’s SBE Entertainment operates the SLS’ nine restaurants and three nightclubs, all offshoots of the company’s best-known brands.

SBE controls the 1,620-room hotel, the largest of the company’s SLS brands in Los Angeles; Beverly Hills, Calif.; and Miami’s South Beach. Deals are in place for more SLS properties in the Middle East, New York, the Bahamas, Philadelphia and Seattle.

SBE has a customer database of 5 million, many from Southern California. SLS Las Vegas is listed in two hotel loyalty programs, including anetwork affiliated with the 40 million-member Hilton HHonors.

Well Fargo Securities gaming analyst Cameron McKnight tells investors that SLS Las Vegas has the components to succeed, can fill a niche on the Strip and will attract new Las Vegas visitors, especially SBE customers.

“We were particularly impressed by the quality of the restaurants and entertainment venues, which will be key to the success of the property, given its location,” McKnight said.

Nazarian engineered the purchase of the Sahara in 2007 with the financial backing of San Francisco-based private equity firm Stockbridge Real Estate, which owns 90 percent of SLS Las Vegas.

He faced years of uncertainty after the recession hit. Initial redevelopment ideas were trashed as SBE operated the nongaming portions of the Sahara until 2011. It took three years for Stockbridge and SBE to raise SLS Las Vegas from the bones of the old building.

Nazarian awaits licensing by state gaming regulators, leaving control of the resort in the hands of Stockbridge Executive Managing Director Terry Fancher and SLS Las Vegas President Rob Oseland.

But Nazarian is the property’s public face.

In the hotel’s main Strip entrance sits at 32-foot tall abstract art piece titled, “Sam by Starck.” Acclaimed French designer Philippe Starck, the creative force behind SLS renovation, designed the piece as a representation of Nazarian.

Simkins said SLS Las Vegas’ success could determine Nazarian’s place on the Strip.

“Perhaps current and future operators will consider complete overhauls of some of the aging Strip casinos as opposed to the historical model of implosion to new development,” Simkins said.

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